Describe some of the trade-offs faced by each of the following: a. a family deciding whether to buy a new car b. a member of Congress deciding how much to spend on national parks c. a company president deciding whether to open a new factory
Describe some of the trade-offs faced by each of the following: a. a family deciding whether to buy a new car b. a member of Congress deciding how much to spend on national parks c. a company president deciding whether to open a new factory
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
1 Describe some of the trade-offs faced by each of
the following:
a. a family deciding whether to buy a new car
b. a member of Congress deciding how much
to spend on national parks
c. a company president deciding whether to
open a new factory
d. a professor deciding how much to prepare
for class
e. a recent college graduate deciding whether
to go to graduate school
2. You are trying to decide whether to take a
vacation. Most of the costs of the vacation (airfare, hotel, and forgone wages) are measured in
dollars, but the benefits of the vacation are psychological. How can you compare the benefits
to the costs?
3 The company that you manage has invested
$5 million in developing a new product, but the
development is not quite finished. At a recent
meeting, your salespeople report that the introduction of competing products has reduced
the expected sales of your new product to
$3 million. If it would cost $1 million to finish
development and make the product, should
you go ahead and do so? What is the most that
you should pay to complete development?
4 Explain whether each of the following government activities is motivated by a concern about
equality or a concern about efficiency. In the
case of efficiency, discuss the type of market
failure involved.
a. regulating cable TV prices
b. providing some poor people with vouchers
that can be used to buy food
c. prohibiting smoking in public places
d. breaking up Standard Oil (which once
owned 90 percent of all oil refineries) into
several smaller companies
e. imposing higher personal income tax rates
on people with higher incomes
f. instituting laws against driving while
intoxicated
5 Discuss each of the following statements from
the standpoints of equality and efficiency.
a. “Everyone in society should be guaranteed
the best healthcare possible.”
b. “When workers are laid off, they should be
able to collect unemployment benefits until
they find a new job.”
11. In what ways is your standard of living different from that of your parents or grandparents
when they were your age? Why have these
changes occurred?
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